Jonathan Browning Out As CEO of VW of America—But Don’t Assume He Was Fired Because of Sales

Justin Berkowitz

Dec 12, 2013

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Jonathan Browning, the British executive who turned around the Volkswagen brand in the U.S., is leaving the company and heading back home to the U.K. Browning’s successor will be Michael Horn, the company announced this morning, who currently runs VW’s global after-sales business. Many have been quick to assume Browning’s departure is tied to Volkswagen’s sales performance in the U.S, and not to the stated “personal reasons” so often cited when executives are asked to exit. The evidence suggests otherwise.

With the company only halfway to its goal of selling 800,000 VeeDubs in the U.S. by 2018, and no growth from last year to this year, some characterized sales as “slumping” and the American division of VW as “struggling.” We’re not looking to play favorites here, but these assessments are melodramatic. First, since Browning took over VW of America in 2009, the division’s sales have doubled. Last year, more Volkswagens were sold in the U.S. than in any year since 1970. It was also the first year in a decade that the Volkswagen brand turned a profit in America. Much of the credit for that can go to Browning’s management of the increasingly profitable VW Credit division, Volkswagen’s captive finance division for leasing and financing cars.

Second, although 2013 sales will be flat, that should be blamed on the lack of new products—a decision made at the global level, not Browning’s. Production facilities in Mexico don’t begin cranking out new Golfs until next year, so VW spent the year clearing out a small stock of the last MkVI Golfs and GTIs. It won’t be until then, either, that we could see a replacement for the eight-year-old Jetta wagon. Sales topping 400,000 per year may actually be impossible until VW has mid- and full-size SUVs to sell in the U.S., as neither the Tiguan nor the Touareg were ever right for the American market. Browning isn’t the reason VW has moved so slowly on the idea of building an SUV in Tennessee alongside the new Passat. Nor is he the reason Volkswagen is so far away from a replacement for the Tiguan, which will need to be built in Mexico to keep its price reasonable by avoiding the 25-percent “chicken tax” on SUVs imported from outside of NAFTA.

These are, in our view, compelling reasons to think that Jonathan Browning’s performance was a far, far cry from inadequate. Assuming that German executives were somehow impatient with VW’s progress here is not the same as them actually being dissatisfied. They’re a pretty intelligent group of people. You need look no farther than the way in which Browning announced his departure. According to company sources, VW of America employees in Herndon, Virginia, were called into a company-wide meeting this morning at which Browning himself gave a speech and introduced Michael Horn as his replacement. Employees are fond enough of Browning—or perceived his reputation as being positive enough—that he received a standing ovation. Does this sound like the circumstances under which canned executives usually leave a company?

Volkswagen has real problems in America, particularly the absence of product as discussed above. In our view, Jonathan Browning wasn’t one of them. We don’t think his bosses disagreed.